Should I get rid of Investment Bonds?

Foggy25

I have 2 Sterling Investment Bonds purchased 13 years ago. Bond A has retained its purchase price plus made one sixth of it's purchase price as profit. Bond B is now worth one and a half times it's original cost. I'm not satisfied with their performance & wonder if I should rid myself of them, particularly because of the lowering of the Capital Gains Tax in April, presumably making this the last best time to do this. I am retired so is my only option to sell & put the money in some sort of ISA? Is it possible to transfer them to something better?  Thank you

Linton

Normal investment bonds are subject to income tax, not CGT.  If you are a basic rate tax payer now it is possible that there will be no further tax to pay when you withdraw the nmioney.

As to what is "better", it all depends on how much it is, what you want from the money and when you want it.  For example to use the money to supplement your pension would be very different to saving it for an inheritance in many years time.

Foggy25

Thank you Linton.
No I won't need this money to supplement my pension, it would be saving as an inheritance or potential care costs, hopefully in the distant future! It's upwards of £50,000. But I suppose it doesn't all have to be moved in one go if that is better & so I don't move up a tax bracket. I am a basic rate tax payer.

That is very good news regarding the tax situation. I have gone back & quickly re-read the Tax Booklet I asked Sterling to send me with a view to selling my Bond: which in light of what you have said I now realise I have misunderstood. 

For me, one of the aspects of  "Better" would be have it safely tucked away & growing without having to worry about any future tax implications or worrying that I may not be doing the best with it.

dunstonh

I'm not satisfied with their performance & wonder if I should rid myself of them, particularly because of the lowering of the Capital Gains Tax in April, presumably making this the last best time to do this.

Investment bonds are not subject to capital gains tax.

The investment bond is just a wrapper for the investments held.   Changing the investments to suit what you want is usually the first step.  Not changing the wrapper.

. I am retired so is my only option to sell & put the money in some sort of ISA?

It is not the only option.  It may or may not be the best option.   We cannot tell on limited information.

 Is it possible to transfer them to something better? 

Its possible.  However, you have only told us about the provider and wrapper.  Not the investments.   Yet it is the investments you are not happy with.  We would need to know more.

Sterling's bond from 13 years ago had a wide fund range.

Foggy25

Thank you dunstonh,
Bond A is MultiManager Protected Profits.
Bond B is 50% Gartmore China Opportunities and 50% Allianz Emerging Markets Equity Fund. This Bond has performed better than the other one.

dunstonh

Both fund selections are pretty rubbish irrespective of the growth.

Bond A was a marketable idea that would sit well with some people but it was invested in a way that reduced liabilities rather than maximise return.  It has capital security of 80% of its highest unit price.      Over half the money is effectively in cash.

Bond B is gung ho in emerging markets and that is basically all or nothing.  A rollercoaster ride.

So, a tidy up on the funds invested in would not go amiss.  That can be done without triggering CGT or any other taxation.